SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Commission only (as permitted by
Rule 14a-6(e)(2).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
Tower Automotive, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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TOWER AUTOMOTIVE, INC.
5211 CASCADE ROAD, SE
GRAND RAPIDS, MICHIGAN 49546
March 28, 2002
To Our Stockholders:
You are cordially invited to attend Tower Automotive, Inc.'s 2002 Annual
Meeting of Stockholders which will be held on May 15, 2002, at 1:00 p.m. local
time, at the Tower Automotive Technical Center, 27175 Haggerty Road in Novi,
Michigan.
The official Notice of Meeting, Proxy Statement and Proxy are included with
this letter. The proposals listed in the Notice of Meeting are more fully
described in the Proxy Statement.
Whether or not you plan to attend the Meeting in person, and regardless of
the number of shares you own, please complete, sign, date and return the
enclosed card promptly in the enclosed envelope. This will ensure that your
shares are voted as you wish and that a quorum will be present.
Sincerely,
/s/ S.A. Johnson
S. A. Johnson
Chairman of the Board
TOWER AUTOMOTIVE, INC.
NOTICE OF
2002 ANNUAL MEETING OF STOCKHOLDERS
TIME: 1:00 p.m. local time, May 15, 2002.
PLACE: Tower Automotive Technical Center
27175 Haggerty Road
Novi, Michigan.
PROPOSALS: (1) Election of directors;
(2) Approval of the Tower Automotive, Inc. Performance Cash
Plan; and
to transact any other proper business.
RECORD DATE: Only holders of record at the close of business on March 22,
2002, are entitled to notice of and to vote on all proposals
presented at the meeting and at any adjournments or
postponements thereof. A list of such holders will be available
prior to the meeting at Tower Automotive's corporate office for
examination by any such holder for any purpose germane to the
meeting.
By Order of the Board of Directors,
/s/ James N. DeBoer
James N. DeBoer
Secretary
Dated: April 3, 2002
YOUR VOTE IS IMPORTANT!
TO VOTE YOUR SHARES, PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY
CARD OR COMPLY WITH THE PROCEDURES FOR VOTING BY TELEPHONE.
TOWER AUTOMOTIVE, INC.
5211 CASCADE ROAD, SE
GRAND RAPIDS, MICHIGAN 49546
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PROXY STATEMENT
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2002 ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 2002
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This Proxy Statement and accompanying Proxy are being furnished to the
holders of Common Stock, par value $.01 per share, (the "Common Stock") of Tower
Automotive, Inc. ("Tower Automotive" or the "Company") in connection with the
solicitation of Proxies on behalf of the Board of Directors of Tower Automotive
(the "Board of Directors") for the Annual Meeting of Stockholders (the "Annual
Meeting"), to be held on May 15, 2002, at 1:00 p.m. local time at the Tower
Automotive Technical Center, 27175 Haggerty Road in Novi, Michigan, and at any
adjournments and postponements thereof. These Proxy materials are being mailed
on or about April 3, 2002, to holders of record, on March 22, 2002, of the
Common Stock.
When you sign and return the enclosed Proxy and if no direction is
indicated, such proxy will be voted FOR the slate of directors described herein,
and FOR the proposal set forth in Item 2 in the Notice of Meeting and, as to any
other business as may properly be brought before the Annual Meeting and any
adjournments or postponements thereof, in the discretion of the Proxy holders.
Returning your completed Proxy will not prevent you from voting in person
at the Annual Meeting should you be present and wish to do so. In addition, you
may revoke your Proxy any time before it is voted, by written notice to the
Secretary of Tower Automotive prior to the Annual Meeting, or by submission of a
later-dated Proxy, or by the withdrawal of your Proxy and voting in person at
the Annual Meeting.
On March 22, 2002, there were 48,483,980 shares of Common Stock
outstanding. Each outstanding share of Common Stock entitles the holder thereof
to one vote per share. The presence in person or by Proxy of at least 51% of
such shares constitutes a quorum. Under Delaware law, abstentions are treated as
present and entitled to vote and therefore have the effect of a vote against a
matter. A broker non-vote on a matter is considered not entitled to vote on that
matter and thus is not counted in determining whether a matter requiring
approval of a majority of the shares present and entitled to vote has been
approved. Votes cast at the meeting or submitted by Proxy will be counted by
inspectors of the meeting who will be appointed by the Company.
ELECTION OF DIRECTORS
The Board of Directors is currently comprised of nine members. The Board
has nominated and recommends the election of each of the nine nominees set forth
below as a director of Tower Automotive, to serve until the next annual meeting
of stockholders or until their successors are duly elected and qualified. All of
the nominees are incumbent directors of Tower Automotive, previously elected by
Tower Automotive's stockholders, except for Ms. Georgia Nelson, who was
appointed to the Board in May 2001. The Board of Directors expects all nominees
named below to be available for election. If any nominee is not available, the
Proxy holders may vote for a substitute unless the Board of Directors reduces
the number of directors.
Directors will be elected at the Annual Meeting by a plurality of the votes
cast at the meeting by the holders of shares represented in person or by Proxy.
Accordingly, the nine individuals who receive the greatest number of votes cast
by stockholders will be elected as directors. There is no right to cumulative
voting on any matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
TO THE BOARD OF DIRECTORS.
The following sets forth information as to each nominee for election at the
Annual Meeting, including age as of March 22, 2002, principal occupation and
employment for a minimum of the past five years, directorships in other publicly
held companies, and period of service as a director of Tower Automotive.
S. A. (Tony) Johnson, 61, has served as Chairman and a Director of Tower
Automotive since April 1993. Mr. Johnson is the founder of Hidden Creek
Industries ("Hidden Creek"), a private industrial management company based in
Minneapolis which has provided certain management and other services to Tower
Automotive. Mr. Johnson is also the Managing Partner of J2R Partners ("J2R"), an
investment partnership that participated in the acquisition of R.J. Tower
Corporation. Prior to forming Hidden Creek, Mr. Johnson served from 1985 to 1989
as Chief Operating Officer of Pentair, Inc., a diversified industrial company.
From 1981 to 1985, Mr. Johnson was President and Chief Executive Officer of Onan
Corp., a diversified manufacturer of electrical generating equipment and engines
for commercial, defense and industrial markets. Mr. Johnson currently serves as
Chairman and a director of Dura Automotive Systems, Inc., a manufacturer of
mechanical assemblies and integrated systems for the automotive industry, and
served as Chairman and a director of Automotive Industries Holding, Inc., a
supplier of automotive interior trim components, from May 1990 until its sale to
Lear Corporation in August 1995.
Dugald K. Campbell, 55, has served as President, Chief Executive Officer
and a Director of Tower Automotive since December 1993. From 1991 to 1993, Mr.
Campbell served as a consultant to Hidden Creek. From 1988 to 1991, he served as
Vice President and General Manager of the Sensor Systems Division of Siemens
Automotive, a manufacturer of engine management systems and components. From
1972 to 1988, Mr. Campbell held various executive, engineering and marketing
positions with Allied Automotive, a manufacturer of vehicle systems and
components and a subsidiary of AlliedSignal, Inc.
Jurgen M. Geissinger, 42, has served as a Director of Tower Automotive
since May 2000. Dr. Geissinger has served as President and Chief Executive
Officer of INA Holding GmbH & Co. KG, a global manufacturer of bearings, linear
guidance systems, automotive transmissions and engine systems since November
1998. From 1992 to October 1998, Dr. Geissinger served in various positions at
ITT Automotive, most recently as Senior Vice President, with responsibility for
the Brakes and Chassis Engineering Division worldwide.
Ali Jenab, 39, has served as a Director of Tower Automotive since January
2001. Mr. Jenab was named President and Chief Operating Officer of VA Linux
Systems, Inc. in February 2001. From August 2000, until February 2001, Mr. Jenab
served as that company's Senior Vice President and General Manager, Systems
Division. From 1983 through August 2000, Mr. Jenab held various positions at
Amdahl Corporation, a provider of high-end integrated computing solutions.
Joe Loughrey, 52, has served as a Director of Tower Automotive since
November 1994. Mr. Loughrey joined Cummins, Inc. in 1974 and has served as
Executive Vice President and President -- Engine Business since October 1999.
Before then, Mr. Loughrey served as Executive Vice President and Group
President -- Industrial and Chief Technical Officer from 1996 to 1999. Mr.
Loughrey is also a director of Sauer-Danfoss, Inc., a worldwide leader in the
design, manufacture and sale of engineered hydraulic systems and components.
James R. Lozelle, 56, has served as a Director of Tower Automotive since
May 1994. Mr. Lozelle served as Executive Vice President for Tower Automotive,
with responsibility for Tower Automotive's operations in Milwaukee, Wisconsin
and Roanoke, Virginia, from April 1997 to January 1999. From the acquisition of
Edgewood Tool and Manufacturing Company ("Edgewood") in May 1994 until March
1997, Mr. Lozelle served at the Tower Automotive Technical Centers, with
responsibility for advanced product development and customer service. Mr.
Lozelle served as President of Edgewood from 1982 until it was acquired by Tower
Automotive. Mr. Lozelle is chairman of the Near Zero Stamping research project
of the Autobody Consortium.
Georgia R. Nelson, 52, was appointed to the Board of Directors of Tower
Automotive in May 2001. Ms. Nelson has served as President of Midwest Generation
EME, LLC, an Edison International company since it was established in 1999 as a
subsidiary of Edison Mission Energy. Midwest Generation is a wholesale power
generation company. Since January 1, 2002, Ms. Nelson has served as General
Manager of Edison Mission Energy -- Americas, a global independent power
operating, development and trading company. From
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1996 to 1999, Ms. Nelson was Senior Vice President of Worldwide Operations and
Division President of the Americas region of Edison Mission Energy. From 1993 to
1996, she served as Senior Vice President of Southern California Edison, a large
U.S. electric utility.
Scott D. Rued, 45, has served as Vice President and a Director of Tower
Automotive since April 1993. He is also the Chief Executive Officer and
President of Hidden Creek. Mr. Rued, a partner of J2R, has also served as
Executive Vice President and Chief Financial Officer of Hidden Creek since
January 1994, and served as its Vice President -- Finance and Corporate
Development from June 1989 through 1993. Mr. Rued served as Vice President,
Chief Financial Officer and a director of Automotive Industries Holding, Inc.
from April 1990 until its sale to Lear Corporation in August 1995. Mr. Rued is
also a director of The Rottlund Company, Inc., a corporation engaged in the
development and sale of residential real estate.
Enrique Zambrano, 46, has served as a Director of Tower Automotive since
December 1997. Mr. Zambrano has served as Chief Executive Officer and a director
of Proeza, S.A. de C.V., a diversified international company that has operations
primarily in the automotive and citrus juice processing industries, since 1988.
Mr. Zambrano is also a director of IMSA, a steel processing company, Pyosa, a
chemical special manufacturing company, SENDA, a leading regional transportation
company, XIGNUX, a Mexican private industrial conglomerate, and ITESM, the
largest private University in Mexico.
There are no family relationships between any of the directors or any of
the Company's executive officers.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held eight meetings (exclusive of committee
meetings) during 2001. During 2001, each director attended at least 75% of the
meetings of the Board of Directors and any committees on which such director
served. The Board of Directors has established the following committees, the
functions and current members of which are noted below.
Executive Committee. The Executive Committee of the Board of Directors
consists of S.A. Johnson (Chairman), Dugald K. Campbell, and Scott D. Rued. The
Executive Committee has all the power and authority vested in or retained by the
Board of Directors, and may exercise such power and authority in such manner as
it shall deem for the best interest of Tower Automotive in all cases in which
specific direction shall not have been given by the Board of Directors, and
subject to any specific limitations imposed by law or a resolution of the Board
of Directors. The Executive Committee met three times during the preceding
fiscal year.
Compensation Committee. The Compensation Committee of the Board of
Directors consists of Joe Loughrey (Chairman), Jurgen M. Geissinger, Ali Jenab,
and Georgia Nelson. During the last fiscal year, the Compensation Committee made
recommendations to the Board of Directors with respect to salaries, compensation
and benefits of directors and executive officers of Tower Automotive, and
granted options under the Tower Automotive, Inc. Long-Term Incentive Plan (the
"Plan") to purchase Common Stock of Tower Automotive. The Compensation Committee
met five times during the preceding fiscal year.
Nominating Committee. The Nominating Committee of the Board of Directors
consists of Joe Loughrey (Chairman) and James R. Lozelle. The Nominating
Committee selects and presents to the Board candidates for election to fill
vacancies on the Board. The Committee did not meet during the preceding year.
Audit Committee. The Audit Committee of the Board of Directors consists of
James R. Lozelle (Chairman), Jurgen M. Geissinger, Ali Jenab, and Georgia
Nelson. The Audit Committee is responsible for reviewing, as it shall deem
appropriate, and recommending to the Board of Directors, internal accounting and
financial controls for Tower Automotive, and accounting principles and auditing
practices and procedures to be employed in the preparation and review of Tower
Automotive's financial statements. The Audit Committee is also responsible for
recommending to the Board of Directors independent public accountants to audit
the annual financial statements of Tower Automotive. The Audit Committee met six
times during the preceding fiscal year. Each member of the Audit Committee is
"independent," based upon the definition of independence under the listing
standards of the New York Stock Exchange. At the time of his appointment as
Chairman of the Audit Committee, on August 28, 2001, Mr. Lozelle did not qualify
as independent, due to
3
the fact that his employment with the Company terminated within three years of
that appointment. As of the date of this Proxy Statement, that three year period
has expired. The Board elected to appoint Mr. Lozelle as Chairman of the Audit
Committee pursuant to the override provisions included in the NYSE Listing
Standards. The Board determined that it was in the best interest of the Company
and its stockholders to make that appointment given Mr. Lozelle's extensive
experience with the Company, his financial acumen and the relative length of
experience other members of the Committee had with Tower Automotive.
Effective December 9, 1999, the Company's Board of Directors adopted a
written charter with respect to the roles and responsibilities of the Audit
Committee. The charter was later amended, effective October 17, 2001. A copy of
the charter, as amended, is attached as Appendix A to this Proxy Statement. On
February 27, 2002, the Committee submitted to the Board the following report:
We have reviewed and discussed with management the Company's audited
financial statements as of the year ended December 31, 2001.
We have discussed with the independent auditors the matters required
to be discussed by Statement on Accounting Standards No. 61, Communication
with Audit Committees, as amended, by the Auditing Standards Board of the
American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter
from the independent auditors required by Independence Standard No. 1,
Independence Discussions with Audit Committees, as amended, by the
Independence Standards Board, and have discussed with the auditors the
auditors' independence.
Based on the reviews and discussions referred to above, we recommend
to the Board of Directors that the financial statements referred to above
be included in the Company's Form 10-K Report for the year ended December
31, 2001.
In issuing this report, we note that management is responsible for the
Company's financial reporting process, including its systems of internal
control, and for the preparation of financial statements in accordance with
generally accepted accounting principles. The Company's independent
auditors are responsible for auditing those financial statements. Our
responsibility is to monitor and review these processes. It is not our duty
or our responsibility to conduct auditing or accounting reviews or
procedures. We have relied, without independent verification, on
management's representation that the financial statements have been
prepared in conformity with U.S. generally accepted accounting principles
and on the representations of the independent auditors included in their
report on the Company's financial statements. Our discussions with
management and the independent auditors do not assure that the financial
statements are presented in accordance with generally accepted accounting
principles, that the audit of our Company's financial statements has been
carried out in accordance with generally accepted auditing standards or
that the Company's independent accountants are in fact "independent."
James R. Lozelle
Jurgen M. Geissinger
Ali Jenab
Georgia Nelson
COMPENSATION OF DIRECTORS
For service in 2001, directors who are not employees of Tower Automotive or
any of its affiliates ("Outside Directors") each received an annual retainer of
$75,000. All, none, or a portion of the retainer, but in increments of not less
than 25%, may be deferred under the Company's Director Deferred Stock Purchase
Plan. Deferred amounts are payable only in shares of the Company's Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Tower Automotive's officers, directors, and persons who beneficially own more
than ten percent of a registered class of Tower
4
Automotive's equity securities, to file reports of securities ownership and
changes in such ownership with the Securities and Exchange Commission (the
"SEC"). Officers, directors, and greater than ten percent beneficial owners also
are required by rules promulgated by the SEC to furnish Tower Automotive with
copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to Tower
Automotive, or written representations that no Form 5 filings were required,
Tower Automotive believes that during the period from January 1, 2001, through
December 31, 2001, all Section 16(a) filing requirements applicable to its
officers, directors, and greater than ten percent beneficial owners were
complied with.
PROPOSAL TO APPROVE THE TOWER AUTOMOTIVE, INC.
PERFORMANCE CASH PLAN
On May 24, 2001, the Board of Directors adopted the Tower Automotive, Inc.
Performance Cash Plan (the "Plan"), subject to approval by the Company's
stockholders. The Board elected to adopt the Plan as a supplemental form of
long-term compensation and thereby reduce reliance on the grant of equity-based
compensation. The Plan provides for incentive cash compensation to selected key
colleagues for an initial performance period beginning January 1, 2001, and
ending December 31, 2002. The following is a description of the Plan, which is
qualified in its entirety to the Plan. Copies of the Plan are available upon
request to the Company or by reviewing the Company's filings with the Securities
and Exchange Commission.
PURPOSE
The purpose of the Plan is to promote the long-term success of the Company
by aligning the long-term financial interests of key colleagues with the
Company's stockholders, and to attract, reward, and retain key colleagues in
leadership roles. Given the long-term focus of the Plan, the Board believes the
Plan will foster long-term improvements in stockholder value and not merely
near-term gains in reported financial performance.
ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee is authorized and required to
establish the length of each Performance Period, the Enterprise Performance
Target for each Performance Period, the criteria for measuring performance,
individual participant targets and the vesting and payout periods. The Committee
also has the authority to interpret the Plan and to establish rules and
regulations for purposes of administering the Plan.
ELIGIBILITY
Participation in the Plan is determined by the Committee. It is intended to
be made available to officers and other key leaders of the Company who have a
significant influence on the long-term performance of Tower Automotive.
Participation in one Performance Period does not entitle participation in
subsequent Performance Periods. At present, there are approximately 52
colleagues that have been selected to participate in the Plan.
DESCRIPTION OF THE PERFORMANCE SYSTEM
Under the Plan, bonus payments are based on the level of achievement of
specific financial objectives for each Performance Period. The length of each
Performance Period (generally between two and four years) is set by the
Committee. The initial Performance Period is for the two-year period ending
December 31, 2002. For each Performance Period, the Committee establishes the
criteria for measuring performance, the Enterprise Performance Target, each
participant's target bonus, and the vesting period and payout for any award
earned during a Performance Period. A participant's bonus is calculated by
multiplying his or her target bonus (expressed either as a percentage of salary
or as a dollar amount) by the level of achievement.
5
For the initial Performance Period, the Performance Target is based upon
the achievement of predetermined targets measuring operational free cash flow as
a return on invested capital. Operational free cash flow is defined as the
Company's income before taxes and joint venture and minority interests, plus
interest, depreciation, amortization, the pre-tax equity earnings of affiliates
and restructuring charges. Invested capital is defined as the average quarterly
invested capital for the Performance Period.
Performance is based upon the achievement of the target level of
operational free cash flow as a percent of invested capital ("cash flow
return"), as well as cash flow return relative to the Company's peer group. Each
of these factors is weighted equally. For example, if an individual's
performance target is set at $50,000, and the free cash return is 50 percent of
target and 100 percent of targeted peer group performance, the bonus would equal
$37,500 [$50,000 x (50%(.5) + 100%(.5))].
For the initial Performance Period, no bonus is earned if free cash return
is less than 12.37 percent or if the Company's free cash return is less than the
twenty-eighth percentile of its peer group. The maximum payout is 200 percent of
the targeted bonus. Also, no bonus may exceed $6 million for a Performance
Period.
Each participant's award is determined at the end of each of Performance
Period. A portion of each award, as determined by the Committee, is payable
currently, and the balance of the award is held in an Interest Account. That
amount is subject to vesting and is payable over the designated vesting period.
The amount that is currently payable may be paid in cash, installments or
deferred under either the Company's Key Leadership Deferred Income Stock
Purchase Plan or the Company's Supplemental Retirement Plan.
If a participant's employment terminates due to death, disability or normal
retirement, the earned award is payable for the prorated period of achievement.
If a participant terminates participation in the Plan for other reasons, the
Committee has the authority to cancel any award amount earned during the
Performance Period, as well as any nonvested award not yet paid. The Plan
provides for acceleration of payments in the event of change in control of the
Company.
AMENDMENT OF THE PLAN
The Committee has the authority to amend the Plan, subject to compliance
with Section 162(m) of the Internal Revenue Code; however, no amendment may,
without the consent of a participant, reduce an earned award amount.
FEDERAL TAX CONSEQUENCES
The following summarizes the consequences of the achievement of earned
award amounts under the Plan and the payment of those amounts, under the Plan,
for federal income tax purposes, based upon management's understanding of
existing federal income tax laws. This summary is necessarily general in nature
and does purport to be complete. Also, state and local income tax consequences
are not discussed, and may vary from locality to locality.
Based upon the terms and conditions of the Plan, participants will not
recognize any compensation at the time an award amount is determined. Upon
payment of an award amount, a participant will recognize ordinary income in the
amount of the bonus paid, unless that amount is deferred, as permitted under the
Plan. Any award amount held in an Interest Account would not be recognized as
ordinary income until paid. The Company will be entitled to a deduction in a
year in which a participant recognizes ordinary income under the Plan.
REQUIRED VOTE FOR APPROVAL
The affirmative vote of a majority of the Company's common stock voted at
the Annual Meeting, in person or by proxy, is required to approve the Plan and
the performance system for the initial Performance Period. Broker nonvotes and
abstentions will not be counted as votes cast on this proposal. Since a majority
of the votes cast is required for approval, any negative votes will necessitate
offsetting affirmative votes to assure approval. Unless otherwise directed by
marking the accompanying proxy, the proxyholders named therein will vote for the
approval of the adoption of the Plan and the performance system.
6
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED
PLAN AND THE ADOPTION OF THE PERFORMANCE SYSTEM.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Arthur Andersen LLP, as independent public accountants, to audit the
consolidated financial statements of Tower Automotive for the year ending
December 31, 2002, and to perform other appropriate services as directed by
Tower Automotive's management and the Board of Directors. The Board of Directors
and the Audit Committee are aware of recent developments concerning Arthur
Andersen LLP and have reviewed these matters with representatives of the firm.
To date, the Board of Directors and the Audit Committee have not revoked the
appointment of Arthur Andersen LLP as the Company's independent public
accountants; however, the Board of Directors and the Audit Committee will
continue to closely monitor ongoing developments at Arthur Andersen LLP and, in
their discretion, may change the appointment at any time during the year if it
is determined that such a change would be in the best interest of the Company
and its stockholders.
The following table sets forth the aggregate fees billed to Tower
Automotive for the year ended December 31, 2001, by the Company's principal
accounting firm, Arthur Andersen LLP:
Audit Fees.................................................. $ 696,700
Financial Information Systems Design and Implementation
Fees...................................................... --
All Other Fees.............................................. 3,158,400(a)(b)
----------
TOTAL:............................................ $3,855,100
---------------
(a) Includes audit related fees of $560,400, which is comprised of statutory
audits of subsidiaries, accounting consultation, various attest services
under professional standards, and assistance with registration statements
and consents. Other fees also consists of fees for tax consulting and
permitted internal auditing outsourcing.
(b) The audit committee has considered whether the provision of services
described above under "all other fees" is compatible with maintaining the
independence of Arthur Andersen LLP.
OTHER BUSINESS
At the date of this Proxy Statement, Tower Automotive has no knowledge of
any business other than that described above that will be presented at the
Annual Meeting. If any other business should properly be brought before the
Annual Meeting and any adjournments or postponements thereof, the Proxies will
be voted in the discretion of the Proxy holders.
OWNERSHIP OF TOWER AUTOMOTIVE COMMON STOCK
Unless otherwise noted, the following table sets forth certain information
regarding ownership of the Common Stock as of March 22, 2002, by (i) the
beneficial owners of more than 5% of the Common Stock of Tower Automotive, (ii)
each director, director nominee, and named executive officer of Tower
Automotive, and (iii) all directors and executive officers of Tower Automotive
as a group. To the knowledge of Tower Automotive, each of such stockholders has
sole voting and investment power as to the shares shown unless
7
otherwise noted. Beneficial ownership of the Common Stock listed in the table
has been determined in accordance with the applicable rules and regulations
promulgated under the Securities Exchange Act of 1934.
BENEFICIAL OWNERSHIP OF
COMMON STOCK(1)
-----------------------
NUMBER OF PERCENT OF
DIRECTORS, OFFICERS AND 5% STOCKHOLDERS SHARES CLASS
--------------------------------------- --------- ----------
S.A. Johnson(2)............................................. 315,610 *
Dugald K. Campbell(2)(3).................................... 574,723 1.2%
James W. Arnold(2).......................................... 63,058 *
Anthony Barone(2)........................................... 129,415
Tom G. Pitser(2)............................................ 104,905 *
Antonio Zarate(2)........................................... 41,604 *
Scott D. Rued(2)............................................ 79,185 *
Jurgen M. Geissinger(2)..................................... 7,640 *
Ali Jenab(2)................................................ 3,027 *
Joe Loughrey(2)............................................. 77,298 *
James R. Lozelle(2)......................................... 434,925 *
Georgia Nelson.............................................. 0 0
Enrique Zambrano(2)......................................... 17,298 *
American Express Financial Corporation(4)................... 2,535,588 5.2%
Dimensional Funds Advisors, Inc.(5)......................... 3,573,000 7.3%
Hartford Mutual Funds, Inc.(6).............................. 2,429,045 5.0%
Morgan Stanley Dean Witter & Co.(7)......................... 3,194,090 6.5%
Pioneer Global Asset Management(8).......................... 2,956,810 6.0%
State of Wisconsin Investment Board(9)...................... 4,875,000 9.9%
Wellington Management Company, LLP(10)...................... 2,454,545 5.0%
All Directors and Officers as a group (15 persons).......... 1,958,565 4.0%
-------------------------
* Less than one percent.
(1) The number of shares includes shares that may be purchased under options
that are exercisable in 60 days. The percent of class is calculated based
on the number of shares outstanding plus such option shares.
(2) Includes the following number of shares issuable as deferred compensation
for the following individuals: Mr. Johnson -- 17,298; Mr.
Campbell -- 90,147; Mr. Arnold -- 13,435; Mr. Barone -- 23,628; Mr.
Pitser -- 23,100; Mr. Zarate -- 3,604; Mr. Rued -- 7,207; Mr.
Geissinger -- 7,640; Mr. Jenab -- 3,027; Mr. Loughrey -- 17,298; Mr.
Lozelle -- 18,223; and Mr. Zambrano -- 17,298.
(3) Includes 259,495 shares held in trusts, of which Mr. Campbell or his wife
are the trustees. Mr. Campbell disclaims beneficial ownership of the shares
held in trust.
(4) American Express Company ("AEC") and American Express Financial Corporation
("AEFC") each reported as of December 31, 2001, shared dispositive power
with respect to 2,535,588 shares of Common Stock and shared voting power
with respect to 537,000 shares of Common Stock. The address for AEFC is 200
AXP Financial Center, Minneapolis, Minnesota 55474.
(5) Dimensional Fund Advisors, Inc. reported as of January 30, 2002, sole
voting and dispositive power with respect to 3,573,000 shares of Common
Stock. The address for Dimensional Fund Advisors, Inc. is 1299 Ocean
Avenue, 11th Floor, Santa Monica, California 90401.
(6) The Hartford Mutual Funds, Inc. reported as of February 14, 2002, shared
voting and dispositive power with respect to 2,429,045 shares of Common
Stock. Its address is 200 Hopmeadow Street, Simsbury, CT 06089.
(7) Morgan Stanley Dean Witter & Co. reported as of February 13, 2002, shared
voting power with respect to 3,044,390 shares of Common Stock and shared
dispositive power with respect to 3,194,090 shares of Common Stock. The
address for Morgan Stanley Dean Witter & Co. is 1585 Broadway, New York,
New York 10036.
(8) Pioneer Global Asset Management, S.p.A reported as of January 28, 2002,
sole voting and dispositive power with respect to 2,956,810 shares of
Common Stock. The address for Pioneer Global Asset Management is Galleria
San Carlo 6, 20122 Milan, Italy.
(9) The State of Wisconsin Investment Board reported as of February 15, 2002,
sole voting and dispositive power with respect to 4,875,000 shares of
Common Stock. The address of the Board is P.O. Box 7842, Madison, Wisconsin
53707.
(10) Wellington Management Company, LLP reported as of February 14, 2002, shared
voting and dispositive power with respect to 2,454,545 shares of Common
Stock. The address for Wellington Management Company, LLP is 75 State
Street, Boston, MA 02109.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation packages for the years ended
December 31, 2001, 2000, and 1999 for Tower Automotive's chief executive
officer's and the four other most highly compensated executive officers (the
"Named Executive Officers").
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ------------
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND SALARY BONUS COMPENSATION GRANTED COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) (#)(3) ($)(4)
------------------ ---- ------ ------ ------------ ------- ------------
Dugald K. Campbell.............. 2001 $637,083 $805,464 0 165,700 $19,124
President and Chief 2000 543,756 0 0 200,000 6,578
Executive Officer 1999 512,500 248,400 0 115,000 18,783
Anthony A. Barone............... 2001 336,875 338,864 0 45,000 11,560
Vice President and 2000 277,082 0 0 75,000 5,374
Chief Financial Officer 1999 242,500 137,500 0 50,000 17,117
Tom G. Pitser................... 2001 256,873 158,652 0 22,000 7,835
Vice President 2000 264,186 0 0 65,000 5,312
1999 232,280 96,000 0 40,000 17,040
Antonio Zarate.................. 2001 260,000 198,288 0 22,000 145,297
Vice President(5) 2000 162,500 0 0 65,000 5,299
1999 -- -- -- -- --
James W. Arnold................. 2001 273,150 248,000 21,140 22,000 10,668
Vice President 2000 219,708 0 0 65,000 8,934
1999 197,200 0 0 15,000 9,598
David Krohn..................... 2001 336,457 0 200,000 52,000 95,359
Vice President(6) 2000 35,417 0 0 120,000 0
1999 -- -- -- -- --
-------------------------
(1) Includes amounts deferred by employees under Tower Automotive's 401(k)
employee savings plan, pursuant to Section 401(k) of the Internal Revenue
Code.
(2) Represents amounts earned under the Company's bonus plan, but excludes
amounts foregone at the election of the Named Executive Officer and payable
in shares of the Company's Common Stock under the Tower Automotive's Key
Leadership Deferred Income Stock Purchase Plan, as reported in the Long-Term
Incentive Plan table. No bonuses were earned for 2000 performance.
(3) The options vest ratably over four years commencing with the first
anniversary of the grant date.
(4) The amounts disclosed in this column include: (a) amounts contributed by
Tower Automotive to Tower Automotive's 401(k) plan and supplement retirement
plan, and (b) dollar value of premiums paid by Tower Automotive for term
life insurance on behalf of the named executive officers as follows:
2001 2000 1999
---- ---- ----
D.K. Campbell............................................... (a) $ 16,700 $4,375 $15,747
(b) 2,424 2,203 3,036
A.A. Barone................................................. (a) 10,200 4,333 15,797
(b) 1,360 1,041 1,320
T.G. Pitser................................................. (a) 6,800 4,316 15,797
(b) 1,035 996 1,243
A. Zarate................................................... (a) -- -- --
(b) 8,297 5,299 --
J.W. Arnold................................................. (a) 9,717 8,409 8,949
(b) 951 525 649
D.D. Krohn.................................................. (a) 5,100 -- --
(b) 1,717 -- --
9
(5) Mr. Zarate began his employment with the Company in May 2000. All other
compensation for 2001 includes $137,000 paid to Mr. Zarate in lieu of
participation in the Company's retirement plans.
(6) Mr. Krohn began his employment with the Company on December 1, 2000, and
terminated employment as of November 1, 2001. All other compensation for
2001 includes $88,542 of severance benefits.
OPTION GRANT TABLE
The following table shows all grants of options to acquire shares of Tower
Automotive Common Stock to the Named Executive Officers under the Stock Option
Plan during the last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES % OF TOTAL ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME (#)(1) FISCAL YEAR (PER SHARE) DATE 5% 10%
---- ---------- ------------ ----------- ---------- -- ---
D.K. Campbell.............. 165,700 18.0% $11.33 03/01/11 $1,180,675 $2,992,062
A.A. Barone................ 45,000 4.9% 11.33 03/01/11 320,642 812,570
T.G. Pitser................ 22,000 2.4% 11.33 03/01/11 156,758 397,256
A. Zarate.................. 22,000 2.4% 11.33 03/01/11 156,758 397,256
J.W. Arnold................ 22,000 2.4% 11.33 03/01/11 156,758 397,256
D.D. Krohn................. 52,000 5.6% 11.33 03/01/11 370,520 938,969
-------------------------
(1) These options vest ratably over four years commencing one year from the date
of grant.
(2) Amounts reflect certain assumed rates of appreciation set forth in the
executive compensation disclosure rules of the Securities and Exchange
Commission. Actual gains, if any, on stock option exercises depend on future
performance of Tower Automotive's Common Stock and overall stock market
conditions. No assurances can be made that the amounts reflected in these
columns will be achieved.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on the exercise of stock options
during 2001 by the Named Executive Officers and the aggregate number and value
of unexercised options held by each Named Executive Officer, as of December 31,
2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS
YEAR-END(#) YEAR-END($)(2)
SHARES VALUE --------------- --------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- --------------------
D.K. Campbell..................... 10,000 $66,875 141,425/224,275 0/0
A.A. Barone....................... 5,000 $30,937 48,750/71,250 0/0
T.G. Pitser....................... -- -- 38,000/49,000 0/0
A. Zarate......................... -- -- 21,750/65,250 0/0
J.W. Arnold....................... -- -- 38,000/49,000 0/0
D.D. Krohn........................ -- -- 0/0 0/0
-------------------------
(1) Represents the aggregate market value of shares acquired at the time of
exercise, less the aggregate exercise price paid by the Named Executive
Officer.
(2) Values are based on the difference between the closing sale price of Tower
Automotive's Common Stock on December 31, 2001 ($9.03), and the exercise
prices of the options.
10
LONG-TERM INCENTIVE PLAN
The following table provides information on the number of restricted stock
units credited to the Named Executive Officers as the result of the deferral of
amounts otherwise payable as bonus compensation for 2001.
NUMBER OF SHARES, PERFORMANCE OR OTHER
UNITS OR OTHER PERIOD UNTIL MATURATION
NAME RIGHTS(#)(1) OR PAYOUT(2)
---- ----------------- -----------------------
D.K. Campbell.................................... -0- --
A.A. Barone...................................... -0- --
T.G. Pitser...................................... (1) 3 years
A. Zarate........................................ -0- --
J.W. Arnold...................................... -0- --
D.D. Krohn....................................... -0- --
-------------------------
(1) Represents the number of units credited to a colleague's account under the
terms of the Company's Key Leadership Deferred Income Stock Purchase Plan
(the "DISP Plan"). Under the terms of the DISP Plan, participants may elect
to defer all or a portion (but not less than 25%) of their cash bonus
payment. Deferred amounts are credited in stock units, based on the value of
the Company's stock as of the end of the month in which the bonus would have
been paid to the colleague. Stock units are payable only in shares of the
Company's common stock. Restricted stock units are not credited until April
of the year following the year for which the bonus was earned. None of the
Named Executive Officers deferred any bonus compensation for 2001, other
than T.G. Pitser who deferred $52,884 of his 2001 bonus.
(2) Under the terms of the DISP Plan, the number of restricted stock units
credited to a participant's basic account is required to equal the amount of
the deferred bonus, divided by the value of a share of the Company's common
stock on the last day of the month in which the cash bonus would otherwise
be paid. In addition, participants are concurrently credited with additional
stock units to a separate Premium Account equal to one-third of the number
of the restricted stock units credited to his or her basic account.
Restricted stock units credited to this Premium Account do not vest until
the 15th day of December of the second plan year following the year the
units are credited to a participant's account, provided that the participant
is then a colleague of the Company. The DISP Plan allows for accelerated
vesting in the event of a participant's death, disability, retirement or
termination during a period of 24 months following a change in control of
the Company.
11
STOCK OPTION EXCHANGE IN LAST FISCAL YEAR
On July 25, 2001, the Company offered to certain of its active colleagues
the right to exchange all options to purchase shares of its common stock that
had an exercise price equal to or greater than $17.125 per share for shares of
restricted stock. In response, effective September 17, 2001, the Company
received options to purchase a total of 1,503,500 shares of common stock in
exchange for the grant of 530,671 shares of restricted stock. The shares of
restricted stock are subject to risks of forfeiture and restrictions on transfer
that do not lapse until September 17, 2004.
NUMBER OF
SECURITIES NUMBER OF SHARES
UNDERLYING MARKET PRICE OF EXERCISE PRICE AT OF RESTRICTED STOCK
OPTIONS STOCK AT TIME OF TIME OF ISSUED IN
NAME DATE EXCHANGED EXCHANGE EXCHANGE EXCHANGE(1)
---- ---- ---------- ---------------- ----------------- -------------------
D.K. Campbell........ a. 09/17/01 a. 40,000 a. $9.00 a. $18.9375 a. 11,969
b. 09/17/01 b. 50,000 b. 9.00 b. 22.9690 b. 14,932
c. 09/17/01 c. 50,000 c. 9.00 c. 17.1250 c. 19,577
d. 09/17/01 d. 115,000 d. 9.00 d. 19.2500 d. 44,080
A. A. Barone......... a. 09/17/01 a. 20,000 a. $9.00 a. $18.9375 a. 5,985
b. 09/17/01 b. 20,000 b. 9.00 b. 22.9690 b. 5,973
c. 09/17/01 c. 20,000 c. 9.00 c. 17.1250 c. 7,831
d. 09/17/01 d. 50,000 d. 9.00 d. 19.2500 d. 19,165
J. W. Arnold......... a. 09/17/01 a. 15,000 a. $9.00 a. $17.1250 a. 5,873
b. 09/17/01 b. 15,000 b. 9.00 b. 19.2500 b. 5,750
T. G. Pitser......... a. 09/17/01 a. 40,000 a. $9.00 a. $18.9375 a. 11,969
b. 09/17/01 b. 20,000 b. 9.00 b. 22.9690 b. 5,973
c. 09/17/01 c. 20,000 c. 9.00 c. 17.1250 c. 7,831
d. 09/17/01 d. 40,000 d. 9.00 d. 19.2500 d. 15,332
A. Zarate............ -- -- -- -- --
D.D. Krohn........... -- -- -- -- --
LENGTH OF
ORIGINAL OPTION
TERM REMAINING
AT DATE OF
NAME EXCHANGE
---- ---------------
D.K. Campbell........ a. 5.5 yrs
b. 6.5 yrs
c. 7.0 yrs
d. 7.5 yrs
A. A. Barone......... a. 5.5 yrs
b. 6.5 yrs
c. 7.0 yrs
d. 7.5 yrs
J. W. Arnold......... a. 7.0 yrs
b. 7.5 yrs
T. G. Pitser......... a. 5.5 yrs
b. 6.5 yrs
c. 7.0 yrs
d. 7.5 yrs
A. Zarate............ --
D.D. Krohn........... --
-------------------------
(1) Represents number of shares of restricted stock issued in exchange for
options surrendered. The shares are subject to risks of forfeiture and
restrictions on transferability that do not lapse until September 17, 2004.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This Compensation Committee report shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that Tower Automotive
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The following has been submitted by the Compensation Committee:
GENERAL EXECUTIVE OFFICER COMPENSATION POLICIES
The Compensation Committee, which was established in connection with Tower
Automotive's initial public offering of Common Stock in August 1994, is
responsible for developing and recommending Tower Automotive's executive
compensation policies to the Board of Directors. The Compensation Committee
believes that executive compensation should be related to the value created for
Tower Automotive's stockholders. The executive officer compensation program has
been designed to attract and retain highly qualified and motivated colleagues
and to reward superior performance.
The combination of both cash compensation (salary and performance bonus)
and equity-based compensation are intended to encourage and reward near-term
objectives, such as financial performance, and Tower Automotive's long-term
goals, such as continuous improvement in customer and colleague satisfaction,
and the growth and prosperity of Tower Automotive and its stockholders.
12
SALARY AND BONUS
In general, the base salaries of Tower Automotive's executive officers are
established at levels believed to be at or below market rates. Each year, the
Committee reviews compensation data from outside consultants, available survey
information and data from companies of comparable size and performance in
ascertaining comparable salary rates. Subject to Committee approval, the base
salaries are set at or below comparable market rates. To provide performance
incentives and to compensate for the below-peer salary rates, Tower Automotive
provides for annual cash awards that are payable if Tower Automotive meets or
exceeds certain predetermined goals established and approved by the Board of
Directors.
Tower Automotive's bonus program is comprised of three principal factors.
First, the Committee establishes a target for each officer expressed as a
percentage of salary. Second, a financial performance factor is determined that
creates a minimum performance requirement and recognition of performance related
to expectations. Third, a team performance factor relating to progress toward
company goals and an individual leadership initiative are established. The bonus
is payable only if the minimum financial performance, the team performance, and
the individual leadership initiative are achieved.
For 2001, the financial performance factor was based upon the achievement
of generating operating free cash flows in excess of predetermined levels. This
objective was established to focus management's attention on the generation of
cash and the preservation of capital in light of deteriorating market
conditions.
The achievement of team objectives and the personal leadership initiatives
(established for each officer and approved by the Committee or Board of
Directors) are based on indicators of progress toward the long-term goals of
Tower Automotive, consistent with Tower Automotive's approach to values-based
leadership. The Committee approves the achievement of team objectives and
personal leadership initiatives based on a determination by the colleague's
mentor or, in the case of the CEO, by the Committee or Board of Directors. To
counterbalance the near-term objectives of financial performance, the team
objectives and individual leadership initiatives are intended to reward and
promote the attainment of long-term objectives. Achievement is based on measures
of Tower Automotive goals of customer satisfaction, colleague satisfaction, and
Company growth and prosperity. The goal of Company growth and prosperity is
primarily focused on the enhancement of stockholder value, taking into
consideration progress toward obtaining new customers, securing new technology,
extending its global presence, expanding business with existing customers and
the market value of Tower Automotive's stock.
In addition to the above-referenced objective factors, the Compensation
Committee has the right to adjust bonus payments based upon its evaluation of
Tower Automotive's performance relative to the overall economy and specific
market considerations. For bonus payments in 2001, the Committee exercised its
discretion and reduced bonus payments to the Company's Executive Leadership Team
by approximately 30%. The Company exceeded its operating free cash flow target
for 2001 and, as a result, reduced a significant amount of its indebtedness and
stayed within its loan covenants, despite market conditions that were much worse
than expected. However, despite the good performance in difficult times, the
Committee elected to reduce the bonus payout amounts due to the Company's
reported 2001 operating loss (which while largely attributable to a
non-recurring restructuring charge, was not planned), its relative returns to
shareholders, and the uncertain market outlook.
LONG-TERM EQUITY INCENTIVES
The long-term equity incentives consist of awards under the Long-Term
Incentive Plan administered by the Compensation Committee. Pursuant to the terms
of the Plan, options are granted at an exercise price equal to Tower
Automotive's Common Stock price on the date the options are granted. The
Compensation Committee believes the Plan aligns management's long-term interests
with stockholder interests, as the ultimate compensation is based upon Tower
Automotive's stock performance. The Compensation Committee also believes the
Plan is a cost effective method of providing key management with long-term
compensation. The Compensation Committee approves the colleagues who participate
in the Plan, based upon recommendations by the Chairman of the Board of
Directors and the Chief Executive Officer. The Compensation
13
Committee determines the number of option shares to be granted to each colleague
based upon individual performance, responsibility, and level of cash
compensation.
In 2001, the Committee recommended, and the Board approved, the adoption of
the Company's Performance Cash Plan, which is described under the caption
"Proposal to Approve the Tower Automotive, Inc. Performance Cash Plan," included
in this Proxy Statement. This Plan is intended to provide a form of long-term
cash compensation to key colleagues. Initially, payment is based upon the
achievement of performance goals over a two year period ending December 31,
2002. In connection with the adoption of the Plan, and as an offset to its other
form of long-term compensation, the Committee reduced the number of stock
options granted to key colleagues.
The income tax laws of the United States limit the amount the Company may
deduct for compensation paid to the Company's Named Executive Officers. Certain
compensation that qualifies as "performance-based" under IRS guidelines is not
subject to this limit. Stock options granted under the Company's stock option
plan are designed to qualify as performance-based compensation, thereby
permitting the Company to deduct the related expenses. The Compensation
Committee believes that these limitations should not cause the Company to be
denied a deduction for 2001 compensation paid to the Named Executive Officers.
The Compensation Committee will continue to work to structure components of its
executive compensation to achieve the maximum deductibility under the Internal
Revenue Code in a manner consistent with its compensation goals and the
Company's values.
REPORT ON STOCK OPTION EXCHANGE
On July 25, 2001, the Company offered to certain of its active colleagues
the right to exchange all options to purchase shares of its common stock, that
had an exercise price equal to or greater than $17.125 per share, for shares of
restricted stock. The Board elected to authorize the exchange based upon the
belief that many of the Company's outstanding options were not achieving the
purpose for which they originally intended. Due in large part to market
conditions that were beyond the control of the Company's colleagues, many of the
Company's outstanding options had exercise prices that were significantly higher
than the prevailing market price of the Company's common stock. The Board
believed that the offer to exchange these outstanding options for restricted
stock would increase option holders' proprietary stake in the Company, create a
stronger incentive to promote the Company's growth and success, and encourage
key colleagues to continue their employment with the Company. In addition, the
options exchanged would become available for future grants under the Company's
Long-Term Incentive Plan.
As a result of the offer, effective September 17, 2001, the Company
received options to purchase a total of 1,503,500 shares of its common stock in
exchange for the grant of 530,671 shares of restricted stock. The Company
retained the services of an executive compensation consultant to calculate the
value of the options available for exchange and the restricted stock to be
issued. The shares of restricted stock that were granted are subject to risks of
forfeiture and restrictions on transfer that do not lapse until September 17,
2004. The options tendered by the colleagues included both vested and unvested
options. For information regarding the options surrendered in connection with
the offer by the Named Executive Officers, please see the table under the
heading "Stock Option Exchange in Last Fiscal Year" above.
CHIEF EXECUTIVE OFFICER COMPENSATION
In 2001, the salary of Dugald K. Campbell, Tower Automotive's Chief
Executive Officer, was set at $660,000, based upon the factors described above
for establishing the salaries of Tower Automotive's executive officers. Mr.
Campbell's bonus is determined under the same criteria used for other executive
officers of Tower Automotive, except that the evaluation of whether the
predetermined goals and criteria have been satisfied are determined by the
Committee or the Board of Directors. For the reasons stated above, as with the
other members of the leadership team, despite exceeding the operating free cash
flow target for 2001, the amount of the bonus determined under the bonus program
was reduced by approximately 30% to take into consideration the reported loss
for 2001, the relative return to shareholders, as well as conditions in the
14
automotive supply industry. During 2001, Mr. Campbell was granted an option to
purchase 165,700 shares of Tower Automotive's common stock, at an exercise price
equal to the market value on the date of grant.
The foregoing report has been approved by all members of the Compensation
Committee.
Compensation Committee:
Joe Loughrey
Jurgen M. Geissinger
Ali Jenab
Georgia Nelson
15
PERFORMANCE GRAPH
The following graph compares Tower Automotive's cumulative total
stockholder return since December 31, 1996, with the Standard & Poor's 500 Index
and with the OEM Automotive Supplier Composite Index. The OEM Automotive
Supplier Composite Index consists of the following: Amcast Industrial
Corporation, Autoliv, Inc., ArvinMeritor, Inc., American Axle & Manufacturing
Holdings, Borg-Warner Automotive, Inc., Collins & Aikman Corporation, Dana
Corporation, Decoma International Inc., Delphi Automotive Systems, Donnelly
Corporation, Dura Automotive Systems, Inc., Eaton Corporation, Federal-Mogul
Corporation, Gentex Corporation, Hayes Lemmerz International, Inc., Intier
Automotive, Inc., Intermet Corporation, Johnson Controls, Inc., Lear
Corporation, Magna International Inc., Methode Electronics, Inc., Modine
Manufacturing Company, Shiloh Industries, Inc., Stoneridge, Inc., STRATTEC
Security Corporation, Superior Industries International, Inc., TRW Inc., Tesma
International, Inc., and Visteon Corporation. The comparison is based on the
assumption that $100.00 was invested on December 31, 1996, in each of the Common
Stocks, the Standard & Poor's 500 Index ("S&P 500 Index"), and the OEM
Automotive Supplier Composite Index with dividends reinvested.
COMPARISON OF TOTAL RETURN AMONG STANDARD & POOR'S 500 INDEX, OEM
AUTOMOTIVE SUPPLIER COMPOSITE INDEX AND TOWER AUTOMOTIVE, INC.
[PERFORMANCE GRAPH]
TWR OEM SUPPLIERS S&P 500
--- ------------- -------
12/31/96 100.0000 100.0000 100.0000
12/31/97 134.6000 125.0200 131.0080
12/31/98 159.6000 136.7360 165.9460
12/31/99 98.8000 125.9940 198.3490
12/31/00 57.6000 89.9261 178.2380
12/31/01 57.7920 113.1030 154.9910
OTHER COMPENSATORY AGREEMENTS
S.A. Johnson and Scott Rued are partners in Hidden Creek Industries, an
affiliate of Tower Automotive. During 2001, Tower Automotive made payments to
Hidden Creek Industries for certain acquisition related assistance, such as
initiating contacts, due diligence, financing, contract negotiation and
modeling, and for various other management services, totaling approximately
$600,000.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 2003 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Annual Meeting in
2003 must be received by the secretary of Tower Automotive, Inc., 5211 Cascade
Road, SE, Grand Rapids, Michigan 49546, not later than December 2, 2002, to be
considered for inclusion in Tower Automotive's 2003 Proxy materials. As of April
3, 2002, no proposals to be presented at the 2002 Annual Meeting had been
received by Tower Automotive. If Tower Automotive receives notice of a
stockholder proposal after February 18, 2003, the persons named as proxies for
the 2003 Annual Meeting of Stockholders will have discretionary voting authority
to vote on that proposal at that meeting.
16
ADDITIONAL INFORMATION
This solicitation is being made by Tower Automotive. All expenses of Tower
Automotive in connection with this solicitation will be borne by Tower
Automotive. Tower Automotive will request brokerage firms, nominees, custodians
and fiduciaries to forward Proxy materials to the beneficial owners of shares
held of record by such persons, and will reimburse such persons and Tower
Automotive's transfer agent for their reasonable out-of-pocket expenses in
forwarding such materials.
Tower Automotive will furnish without charge to each person whose Proxy is
being solicited, upon the written request of any such person, a copy of Tower
Automotive's Annual Report on Form 10-K for the fiscal year ended December 31,
2001, as filed with the SEC, including the financial statements. Requests for
copies of such Annual Report on Form 10-K should be directed to: Tower
Automotive, Inc., 5211 Cascade Road, SE, Grand Rapids, Michigan 49546.
PLEASE COMPLETE THE ENCLOSED PROXY AND MAIL IT IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE, OR COMPLY WITH THE PROCEDURES FOR VOTING BY
TELEPHONE.
By Order of the Board of Directors,
/s/ James N. DeBoer
James N. DeBoer
Secretary
April 3, 2002
17
APPENDIX A
TOWER AUTOMOTIVE, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
RESOLVED, that the Audit Committee is a committee of the Board of Directors
of Tower Automotive, Inc. chartered to the following purposes, powers and
duties:
PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the corporation to
any governmental body or the public; the corporation's system of internal
controls regarding finance, accounting, legal compliance and ethics which
management and the Board of Directors have established; and the corporation's
auditing, accounting and financial reporting processes. The Audit Committee
shall encourage continuous improvement of and adherence to Tower Automotive,
Inc.'s policies, procedures and practices. The Audit Committee's duties are to:
1. Serve as an independent and objective body to monitor the
corporation's financial reporting process and internal control system.
2. Review and appraise the audit efforts of the corporation's
independent accountants and internal auditor.
3. Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditor and the
Board of Directors.
COMPOSITION
The Audit Committee shall be comprised of at least 3 directors as
determined by the Board of Directors, each of whom shall be independent
directors, free from any relationship to the corporation that may interfere with
the exercise of their independence from management and the corporation. All
members of the Committee shall have a working familiarity with basic financial
and accounting practices and at least one member of the Committee shall have
accounting or related financial management expertise.
The Chair and the members of the Audit Committee shall be elected by the
Board of Directors at the annual organizational meeting of the Board to serve
until the next annual organizational meeting or until their successors shall be
duly elected and qualified.
MEETINGS
The Audit Committee shall meet at least four times annually. To ensure open
communications, the Audit Committee shall meet at least annually in separate
sessions with management, the internal auditor and the independent accountants
to discuss any matters which either the Audit Committee or each of these groups
believe should be discussed independently of the other groups.
ACTIVITIES
To fulfill its responsibilities and duties, the Audit Committee shall:
DOCUMENT AND REPORT REVIEW
1. Review and update this Charter periodically or as conditions dictate (at
least, annually).
2. Review the corporation's annual financial statements and any reports or
other financial information submitted to any governmental body or to the public,
including any report issued by the independent accountants.
A-1
3. Review the summary report of the internal auditor and management's
response to such reports.
INDEPENDENT ACCOUNTANTS
4. Ensure that the independent accountants are ultimately accountable to
the Board of Directors and the Audit Committee, as representatives of the
shareholders. Accordingly, the Committee shall recommend to the Board of
Directors the selection of the independent accountants, considering independence
and effectiveness, and approve the fees and other compensation to be paid to the
independent accountants
5. On an annual basis, review and discuss with the independent accountants
all significant relationships the accountants have with the corporation to
determine the accountants' objectivity and independence, undertaking or
recommending appropriate action to ensure and continue that independence.
6. Review and evaluate the performance of the independent accountants and
approve any proposed discharge of the independent accountants.
7. Consult with the independent accountants at least annually, out of the
presence of management, about internal controls.
FINANCIAL REPORTING PROCESSES
8. Review the integrity of the corporation's financial reporting process,
both internal and external, giving consideration to consultation with
management, the independent accountants and the internal auditor.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the corporation's accounting principles as applied to its
financial reporting.
10. Consider and approve, as appropriate, major changes to the
corporation's auditing and accounting principles and practices as suggested by
the independent accountants, management or the internal auditor.
PROCESS IMPROVEMENT
11. Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountants and the internal
auditor regarding any significant judgments made in management's preparation of
the financial statements and the view of each as to appropriateness of such
judgments.
12. In respect of the annual audit, review separately with each of
management, the independent accountants and the internal auditor any significant
difficulties encountered during the course of the audit, including any
restriction on the scope of work or access to required information.
13. Review any significant disagreement among management and independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
14. Review with the independent accountants, the internal auditor and
management the extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have been implemented.
ETHICAL AND LEGAL COMPLIANCE
15. Review Tower Automotive, Inc.'s Mission, Vision, Values, Goals, and
Compliance Policies approved by the Board of Directors, to ensure that
management has maintained a system to comply with expected ethical and legal
requirements.
16. Review management's monitoring of Tower Automotive, Inc.'s compliance
with the corporation's Mission, Vision, Values, Goals, and Compliance Policies
approved by the Board of Directors, and ensure that management has the proper
review system in place to ensure that the corporation's financial statements,
reports and other financial information disseminated to governmental
organizations and the public satisfy legal requirements.
17. Review the activities, organizational structure and qualifications of
the internal auditing department.
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18. Review, with the corporation's counsel, legal compliance matters
including corporate securities trading policies.
19. Review, with the corporation's counsel, any legal matter that could
have a significant impact on the corporation's financial statements.
20. Perform any other activities consistent with this Charter, the
corporation's By-laws and governing law, and the Audit Committee or the Board of
Directors deems necessary or appropriate.
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[TOWER AUTOMOTIVE LOGO]
Performance Cash Plan
May 24, 2001
PERFORMANCE CASH PLAN
TABLE OF CONTENTS
PAGE
ARTICLE 1 PURPOSE 1
ARTICLE 2 EFFECTIVE DATE AND TERMINATION DATE 1
2.1 EFFECTIVE DATE 1
2.2 TERMINATION DATE 1
ARTICLE 3 DEFINITIONS 1
ARTICLE 4 ELIGIBILITY 2
ARTICLE 5 ADMINISTRATION 2
5.1 AMENDMENT OR TERMINATION 2
5.2 COMMITTEE AUTHORITY 2
5.3 INDEMNIFICATION
ARTICLE 6 ENTERPRISE PERFORMANCE TARGETS 3
6.1 CRITERION FOR MEASURING PERFORMANCE 3
6.2 ESTABLISHMENT OF ENTERPRISE PERFORMANCE TARGET 3
ARTICLE 7 PARTICIPATION; PARTICIPANT PERFORMANCE TARGETS 3
7.1 GRANTING AWARDS 3
7.2 SHAREHOLDER APPROVAL REQUIREMENTS 3
7.3 NEW HIRED AND TRANSFERRED COLLEAGUES 3
ARTICLE 8 PAYMENT 3
8.1 EVALUATING PERFORMANCE AND COMPUTING AWARDS 3
8.2 COMPUTING AWARD AMOUNTS 3
8.3 TIMING AND FORM OF PAYMENT OF AWARD AMOUNTS 3
8.4 CHANGE IN CONTROL 5
8.5 DISTRIBUTION IN EVENT OF FINANCIAL EMERGENCY AND ACCELERATION OF PAYMENTS 5
ARTICLE 9 TERMINATION 6
9.1 TERMINATION FOR NORMAL RETIREMENT, DEATH OR PERMANENT DISABILITY 6
9.2 TERMINATION FOR OTHER REASONS 6
ARTICLE 10 OTHER CONSIDERATIONS 6
10.1 BENEFICIARY DESIGNATION 6
10.2 CLAIM TO PERFORMANCE CASH AWARDS AND EMPLOYMENT RIGHTS 6
10.3 NONTRANSFERABILITY 7
10.4 TAX WITHHOLDING 7
10.5 ADMINISTRATIVE EXPENSES 7
10.6 GOVERNING LAW
APPENDIX A 2001-2002 PLAN ELEMENTS 8
ii
TOWER AUTOMOTIVE, INC
PERFORMANCE CASH PLAN
ARTICLE 1.
PURPOSE
The purpose of the Tower Automotive, Inc. Performance Cash Plan (the "Plan") is
to promote the long-term success of the Enterprise by aligning the long-term
financial interests of key colleagues ("Leaders") with shareholders and to
attract, reward and retain colleagues in key leadership roles.
ARTICLE 2.
EFFECTIVE DATE AND TERMINATION DATE
2.1 Effective Date. The Plan shall be effective as of January 1, 2001,
contingent on approval by Shareholders at the next regularly scheduled
shareholders meeting following May 24, 2001, and prior to any payment
to participants under the Plan.
2.2 Termination Date. No Awards may be granted under the Plan after March
1, 2009. Termination of the Plan shall not cancel, reduce or otherwise
impair the opportunity for Participants to receive any Award Amounts
attributable to Awards granted prior to termination of the Plan.
ARTICLE 3.
DEFINITIONS
3.1 "Administrator" shall mean the Board or any Committee designated by the
Board to administer the Plan.
3.2 "Award" shall mean the grant to a Participant of the right to receive
an Award Amount, as set forth in Section 7.1 of the Plan.
3.3 "Award Amount" shall mean the amount of the Award earned by a
Participant based upon the level of achievement of the Participant
Performance Target, determined after the end of the Performance Period.
3.4 "Base Salary" shall mean the annual rate of base pay for a Participant
in effect as of the last day of the Performance Period (or other date
as the Committee may specify by action taken within 90 days after the
beginning of the Performance Period).
3.5 "Beneficiary" shall mean the person, persons or estate entitled to
receive any Award Amounts due a Participant in the event of the
Participant's death.
3.6 "Board" shall mean the Board of Directors of Tower Automotive, Inc..
3.7 "Committee" shall mean the Compensation Committee or other committee of
the Board, as specified by the Board, provided each member of the
committee is an "outside director" as that term is used in Section
162(m) of the Internal Revenue Code, as amended, and the regulations
promulgated thereunder.
3.8 "Enterprise" shall mean Tower Automotive, Inc., a Delaware
corporation, and any successor thereto that adopts the Plan.
3.9 "Enterprise Leader" shall mean the chief executive officer of the
Enterprise.
3.10 "Enterprise Performance Target" shall mean an Enterprise financial
measure and specific financial objectives as defined and approved by
the Committee for each Performance Period. For each Performance Period,
the Enterprise Performance Target formula, tables, Performance Period,
criterion for measuring
1
performance, Vesting Period and payout process will be attached as an
Appendix to this document and will be furnished to all Participants.
3.11 "Participant" shall mean an individual colleague of the Enterprise or
Subsidiary who has been approved for participation in the Plan by the
Committee.
3.12 "Participant Performance Target" is a Participant's specific Award
opportunity which may be earned under the Plan for a specific
Performance Period, based upon the level of achievement of the
Enterprise Performance Target and Plan requirements.
3.13 "Performance Period" shall mean the period of time defined by the
Committee within which the financial objectives must be met for an
Award Payment. The Performance Period will generally be for not less
than two years nor more than four years.
3.14 "Subsidiary" shall mean any corporation or other entity at least eighty
percent (80%) of the outstanding voting equity securities of which is
owned (directly or indirectly) by the Enterprise.
3.15 "Vesting Period" shall mean the portion of time after an Award Amount
is earned (determined at the end of a Performance Period) until it is
eligible for payment. If fifty percent of an Award Amount is paid at
the end of a Performance Period, the Participant is not eligible to
receive the remaining fifty percent until the end of one or more
Vesting Periods.
ARTICLE 4.
ELIGIBILITY
Officers and other key Leaders of the Enterprise who have a significant
influence upon the long-term performance of the Enterprise will be eligible to
participate in the Plan. Participation in one Performance Period, however, will
not automatically guarantee participation in subsequent Performance Periods. The
Committee will approve the participation of each Participant and determine the
Participant Performance Target for each, based upon the recommendation of the
Enterprise Leader.
ARTICLE 5.
ADMINISTRATION
5.1 Amendment or Termination. Subject to compliance with Section 162(m) of
the Internal Revenue Code, or any successor provisions, the Board or
Committee may modify or amend, in whole or in part, any or all of the
provisions of the Plan; or suspend or terminate the Plan. No such
modification, amendment, suspension or termination may, without the
consent of the Participant or his/her Beneficiary in the case of
his/her death, reduce the potential Award Amount for a Participant
based upon a previously granted Award, and no such amendment shall,
without shareholder approval, increase the maximum Award Amount
specified in Section 8.1 below.
5.2 Committee Authority. Except as otherwise specifically provided by the
Plan, the Committee shall have full and exclusive authority to
administer the Plan. Any determinations, rulings, or interpretations,
including decisions on events not covered by Plan provisions, made by
the Committee shall be final and binding on all persons, including the
Enterprise, shareholders of the Enterprise, Participants, and other
colleagues. The Committee may make such reasonable rules and
regulations concerning the administration of the Plan as it deems
necessary or appropriate.
5.3 Indemnification. Except as otherwise specifically provided by law or
regulation, the Board of Directors, the Committee, or officers of the
Enterprise and the Enterprise shall be held harmless for any decisions
or actions that result from the administration of the plan.
2
ARTICLE 6.
ENTERPRISE PERFORMANCE TARGETS
6.1 Criterion for Measuring Performance. The criterion to be used to
measure the financial performance of the Enterprise for purposes of
this Plan shall be established by the Committee for each Performance
Period and attached as an Appendix to the Plan. The Initial Performance
Period criterion will be Operational Free Cash Flow Return on Invested
Capital, as defined in that Appendix. The criterion may be changed by
the Committee from Performance Period to Performance Period as it deems
appropriate, in order to tie the Plan to financial objectives that will
achieve long-term Enterprise and shareholder value.
6.2 Establishment of Enterprise Performance Target. The Committee shall
establish an Enterprise Performance Target within a reasonable time
period before or after the beginning of each Performance Period, the
details of which shall be set forth in an appendix to the Plan.
ARTICLE 7.
PARTICIPATION; PARTICIPANT PERFORMANCE TARGETS
7.1 Granting Awards. The committee shall select the Participants in the
Plan. For each Participant the Committee shall establish the
Participant Performance Target, which may be expressed as either a
dollar amount or a percentage of the Participant's Base Salary for the
Performance Period for which the person has been selected as a
Participant in the Plan (an "Award").
7.2 Shareholder Approval Requirements. The Committee, in its discretion,
may make all or any portion of the Award Amount contingent upon
receiving subsequent shareholder approval sufficient to qualify payment
thereunder as deductible for the Enterprise. The Committee may take
such action without the consent of Participants.
7.3 New Hired and Transferred Colleagues. Notwithstanding anything to the
contrary herein, in the case of a person who is newly hired into an
eligible position or transferred into an eligible position after the
beginning of a Performance Period, the Committee may at any time select
that colleague as a Participant, and fix the terms of any such Award,
whether or not the action qualifies for the performance-based exception
under Section 162(m) of the Code.
ARTICLE 8.
PAYMENT
8.1 Evaluating Performance and Computing Award Amounts. As soon as
practicable following the close of a Performance Period, the Committee
shall determine the percentage achievement of the Enterprise
Performance Target and the corresponding percentage achievement of each
Participant Performance Target applicable to that Performance Period,
provided that the maximum Award Amount for any Participant with respect
to any Performance Period shall be six million dollars ($6,000,000).
All Award Amounts are subject to certification in writing by the
Committee prior to payment.
8.2 Computing Award Amounts. Award Amounts will be calculated from a
formula or table, which will be approved by the Committee as part of
the establishment of the Enterprise Performance Target and the
Participant Performance Target, and which will be issued to each
Participant at the time of selection as a Participant for that
Performance Period.
8.3 Timing and Form of Payment of Award Amounts.
(a) Immediately following the certification of an Award Amount for
a Participant under Section 8.1, the enterprise shall notify
each Participant of his or her Award Amount. The Award Amount
shall be payable as follows:
3
(i) Payable Award. That portion of the Award Amount which
is equal to the total Award Amount, multiplied by a
fraction (the "Vesting Rate"), the numerator of which
is 1 and the denominator of which is the number of
years of the Vesting Period selected for that
Performance Period (the "Payable Award") shall be
paid in cash to the Participant or, at the
Participant's election, in the manner set forth in
Sections 8.3(b), (c), or (d) below.
(ii) Nonvested Award. The total Award Amount, less
the Payable Award (the "Nonvested Award"), shall be
credited to a bookkeeping reserve account which shall
be established for each Participant on the books and
records of the Enterprise and to be referred to as
his or her "Interest Account." The Nonvested Award
shall be vested and become a Payable Award in
accordance with the Vesting Period selected for that
Performance Period. Subject to Participant's
continued employment with the Enterprise, as provided
under the conditions in Article 9 below, on each
anniversary of the end of that Performance Period,
the amount of the Nonvested Award, multiplied by the
Vesting Rate, shall become a Payable Award under
Section 8.3(a)(i) above. The payment of the amount
that becomes a Payable Award shall be paid in
accordance with the Participant's payment election
form in effect at that time.
The unpaid balance in the Interest Account shall be credited
with a simple annual interest equivalent as follows: As of
January 1 following the close of the Performance Period, the
Nonvested Award shall become part of the unpaid balance of the
Interest Account. The Interest Account shall be credited on
December 31 of each year with an amount equal to interest on
the unpaid balance of the Interest Account for the duration of
the year ending on December 31 at the rate determined by
adding together the prime rate in effect at Bank One, N.A. (or
any successor thereto) on the last banking day prior to the
beginning of the year and the prime rate in effect at the bank
on the last banking day of the year and dividing the total by
2 (two). If the Interest Account is terminated for any reason
prior to December 31 of any year, the Interest Account shall,
upon the termination date, be credited with an amount equal to
interest at the average prime rate on the unpaid balance
outstanding during that portion of the year prior to the date
of termination.
(b) Key Leadership Deferred Income Stock Purchase Plan. A
Participant may elect to defer the payment of all or not less
than twenty-five percent (25%) of any Payable Award and have
that amount credited to his or her benefit under the terms of
the Company's Key Leadership Deferred Income Stock Purchase
Plan (the "DISP Plan"), under the terms of that Plan, except
that the number of Restricted Stock Units concurrently
credited to a Participant's Premium Account shall equal ten
percent (10%) of the number credited to the Participant's
Basic Account based upon the deferral of the Payable Award.
(c) Supplemental Retirement Plan. The Participant may elect to
defer all or not less than twenty-five percent (25%) of a
Payable Award and have that amount credited to his or her
"Supplemental Retirement Account" under the terms of the
Company's Supplemental Retirement Plan (the "SERP").
(d) Installment Payments. A Participant may also elect that part
or all of the Payable Award due to the Participant with
respect to any Performance Period shall be paid to him or her
on a current (rather than a deferred basis). For any
Performance Period for which a Participant elects payment on a
current basis, the Payable Award shall be paid to the
Participant, at the Participant's option, in a lump sum, or by
Committee approval, in installments (which need not be equal)
commencing in the first quarter following the close of the
Performance Period, over a period not to exceed five years.
Interest will be paid on the balance in the interest account
according to Section 8.3 (a)(i). Installment amounts due or
payable under Section 8.3(d) shall not be subject to vesting.
(e) An election under Sections 8.3(b), (c), or (d) with respect to
any Performance Period must be filed in writing with the
Committee not later than the first day of the second fiscal
year in the
4
Performance Period. Any such election shall be irrevocable. If
no election is filed, the full amount of the Payable Award
shall be paid in one (1) lump sum cash payment.
8.4 Change in Control. Notwithstanding Section 9.2 or any other provision
of this Plan, within 30 days following a Change in Control as defined
below, each Participant shall be entitled to receive a lump sum payment
in cash equal to: the product of (x) the Participant's Performance
Target for the year in which the Change in Control occurs, based on
maximum achievable Participant Performance Target for the Participant
under the Plan and (y) a fraction, the numerator of which is the number
of days after January 1 in the year to the date on which the Change in
Control occurs and the denominator of which is 365. In addition, the
Enterprise shall pay to each Participant a lump sum amount in cash
within 30 days following the Change in Control all amounts accumulated
in the Participant's Interest Account under the Plan.
"Change in Control," means an occurrence of a nature with respect to
the Enterprise that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act. Without limiting the inclusiveness of the definition in
the preceding sentence, a Change in Control shall be deemed to have
occurred as of the first day that any one or more of the following
conditions is satisfied:
(a) Any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Enterprise representing
twenty percent (20%) or more of the combined voting power of
the Enterprise's then outstanding securities; or
(b) At any time a majority of the Board of Directors of the
Enterprise is comprised of other than Continuing Directors
(for purposes of this section, the term Continuing Director
means a director who was either (i) first elected or appointed
as a director prior to the Effective Date of this Agreement;
or (ii) subsequently elected or appointed as a director if the
director was nominated or appointed by at least a majority of
the then Continuing Directors; or
(c) Any of the following occur:
(i) Any merger or consolidation of the Enterprise, other
than a merger or consolidation in which the voting
securities of the Enterprise immediately prior to the
merger or consolidation continue to represent (either
by remaining outstanding or being converted into
securities of the surviving entity) fifty percent
(50%) or more of the combined voting power of the
Enterprise or surviving entity immediately after the
merger of consolidation with another entity;
(ii) Any sale, exchange, lease, mortgage, pledge,
transfer, or other disposition (in a single
transaction or a series of related transactions) of
assets or earning power aggregating more than fifty
percent (50%) of the assets or earning power of the
Enterprise on a consolidated basis;
(iii) Any liquidation or dissolution of the Enterprise;
(iv) Any reorganization, reverse stock split, or
recapitalization of the Enterprise which would
result in a Change in Control; or
(v) Any transaction or series of related transactions
having, directly or indirectly, the same effect as
any of the foregoing; or any agreement, contract, or
other arrangement providing for any of the foregoing.
8.5 Distribution in Event of Financial Emergency and Acceleration of
Payments. The Committee may in its sole discretion elect to make or
accelerate payments of the amounts remaining in the Participant's
Interest Account either prior to termination of employment or
thereafter if the unpaid balance at any time is less than
5
$50,000, or in the event the Committee determines that financial
emergency has occurred in the personal affairs of the Participant or
his/her Beneficiary in case of his/her death. If requested by a
Participant while in the employ of the Enterprise or a subsidiary, and
the Committee determines that a financial emergency has occurred in the
financial affairs of the Participant, the vested amounts in the
Interest Account of the Participant may be paid to the Participant in
the same manner they would have paid had the Participant terminated
his/her employment with the Enterprise or subsidiary on the date of the
request. Approval of such requests is at the sole discretion of the
Committee.
ARTICLE 9.
TERMINATION
9.1 Termination for Normal Retirement, Death or Permanent Disability. If a
Participant's employment is terminated during a Performance Period by
reason of Normal Retirement or Disability (each as defined by the Tower
Automotive Retirement Plan, or as determined by the Committee), or
Death ("Normal Termination"), payments shall be determined and paid
under Article 8 as if the fiscal year during which the termination
takes place is the last fiscal year of that Performance Period.
However, before the determination is made, the Award Amount for the
Performance Period shall, as of the date of Normal Termination, be
reduced to a number calculated by multiplying the Award Amount by a
fraction. The numerator of the fraction shall be the number of full
months during which the Participant was a colleague of the Enterprise
during the Performance Period and the denominator of which is the
number of full months in that Performance Period.
9.2 Termination for Other Reasons. Except as provided in Section 8.4, the
Committee shall have the discretion to cancel an Award for both a
current Performance Period as well as any Nonvested Award if the
Participant's employment is terminated during a Performance Period for
any reason other than Normal Termination.
ARTICLE 10.
OTHER CONSIDERATIONS
10.1 Beneficiary Designation. A Participant may designate a Beneficiary or
Beneficiaries who, upon the Participant's death, are to receive the
distributions that otherwise would have been paid to the Participant.
All designations shall be in writing and shall be effective only if and
when delivered to the Committee during the lifetime of the Participant.
If a Participant designates a Beneficiary without providing in the
designation that the Beneficiary must be living at the time of each
distribution, the designation shall vest in the Beneficiary all of the
distributions whether payable before or after the Beneficiary's death,
and any distribution remaining upon the Beneficiary's death shall be
made to the Beneficiary's estate. A participant may from time to time
during his/her lifetime change his/her Beneficiary by a written
instrument delivered to the Committee or other administrator appointed
by the Committee. In the event a Participant shall not designate a
Beneficiary as aforesaid, or if for any reason such designation shall
be ineffective, in whole or in part, the distribution that otherwise
would have been paid to the Participant shall be paid to the
Participant's estate and in the event the term "Beneficiary" shall
include his/her estate.
10.2 Claim to Performance Cash Awards and Employment Rights. No colleague or
other person shall have any claim or right to be assigned any interest
under this Plan. Neither this Plan nor any action taken hereunder shall
be construed as giving any colleague any right to be retained in the
employ of the Enterprise or a Subsidiary.
10.3 Nontransferability. A Participant's rights and interests under this
Plan, including amounts payable, may not be assigned, pledged, or
transferred except in the event of the Participant's death, to his/her
designated Beneficiary as provided in this Plan, or in the absence of
such designation, by will or the laws of descent and distribution.
6
10.4 Tax Withholding. The Enterprise shall have the right to deduct from all
cash payments any federal, state, or local taxes required by law to be
withheld with respect an Award Amounts paid in cash or its equivalent.
10.5 Administrative Expenses. The Enterprise shall bear the expenses of
administering the Plan.
10.6 Governing Law. This Plan shall be construed, administered and governed
in all respects in accordance with the laws of the State of Delaware.
7
TOWER AUTOMOTIVE, INC
CASH PERFORMANCE PLAN
APPENDIX A. 2001-2002 PERFORMANCE CRITERION
2001-2002 Measure = Operational Free Cash Flow Return on Invested
Capital
Operational Free Cash Flow = Income before tax, JV earnings, and
minority interest
Plus: Interest
Depreciation
Amortization
Pretax equity earnings of affiliates (equity earnings
in affiliated divided by (1-tax rate))
Restructuring charges
Minus: Minority interest
Invested Capital - Average quarterly invested capital for the
Performance Period
Proposed Formula:
Factor 1 (50%)
Operational Free Cash Flow divided by: Invested Capital = OFCFROIC
Factor 2 (50%)
Relative Performance among the peer group expressed as a
percentile. Scale to be constructed to index percentile from
0-100 percentile based upon the performance of the selected peer
group. No payout on Factor 2 for performance at or below the 25th
percentile. One hundred percent (100%) payout for performance at
the 60th percentile, 200% payout for performance at or above the
90th percentile.
Proposed Peer Group Companies:
Selected to be a representative group of Tier 1 suppliers with
similar growth patterns, capital requirements and product array.
American Axle Arvin Meritor Borg Warner
Dana Dura Automotive Hayes Lemmerz
Oxford Automotive Tenneco Automotive
8
PROXY
TOWER AUTOMOTIVE, INC. PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON MAY 15, 2002
The undersigned hereby appoints S.A. Johnson and D.K. Campbell, or either of
them, proxies for the undersigned, each with full power of substitution, to
attend the Annual Meeting of Stockholders of Tower Automotive, Inc. to be held
on May 15, 2002 at 1:00 p.m., Eastern Time, and at any adjournments thereof,
and to vote as specified in this Proxy all the shares of stock of the Company
which the undersigned would be entitled to vote if personally present.
Your vote with respect to the election of Directors and the other proposals may
be indicated on the reverse. Nominees for Directors are: S.A. Johnson, D.K.
Campbell, J.M. Geissinger, Ali Jenab, Joe Loughrey, J.R. Lozelle, G.R. Nelson,
S.D. Rued, E. Zambrano.
Your vote is important! Please sign and date on the reverse and return promptly
in the enclosed postage-paid envelope.
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Comments
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(IF YOU HAVE WRITTEN IN THE ABOVE SPACE, PLEASE MARK THE "COMMENTS" BOX
ON THE REVERSE OF THIS CARD.)
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/\ FOLD AND DETACH HERE /\
[ X ] PLEASE MARK YOUR |
VOTES AS IN THIS | 1887
EXAMPLE. |______
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
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FOR WITHHELD FOR AGAINST ABSTAIN |
1. Election of [ ] [ ] 2. Approval of the [ ] [ ] [ ] | 3. In their discretion, the Proxies are
Directors Tower Automotive, Inc. | authorized to vote upon such other
(See reverse) Performance Cash Plan. | business as may properly come before
| the meeting.
For, except vote withheld from the following nominees(s): |
|
|
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Change of [ ]
Address/Comments
on reverse side
Please sign exactly as name appears
hereon, Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee, guardian, officer,
general partner, etc., please give full
title as such.
------------------------------------------
------------------------------------------
SIGNATURE(S) DATE
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/\ FOLD AND DETACH HERE /\
TOWER AUTOMOTIVE, INC.
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, May 15, 2002 at 1:00 PM
Tower Automotive Technical Center
27175 Haggerty Road
Novi, Michigan
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